Cabot Oil & Gas Hits Record High

By Sam Mamudi

Cabot Oil & Gas (COG) is having a great day — the stock has hit a record high, and is up 10% at the latest.

Truth is, it’s had a terrific seven-and-a-bit months: Since closing at $31.13 on June 4, it’s risen 90% to today’s $59 share price.

Cabot this morning reported fourth-quarter earnings and revenue well ahead of consensus estimates. It also said production was up 44% from the prior year period, while full-year production was up 43% compared to 2011. Annual revenues and cash flow hit record highs.

As if that’s not enough, the natural-gas company is set fair for a great 2013:

Looking forward Cabot management continues to forecast a $1.0B 2013 capital budget. On this budget, production growth should range from 30% to 50% in 2013, likely depending on midstream facility and pipeline access and resulting completion timing. Were Cabot to do nothing more than hold its recent 1.0 bcfepd production rate flat for 2013, it would represent 16.9% growth over Q4:12′s 855.8 MMcfepd average and 36.8% growth over 2012′s average production rate of 730.9 MMcfepd.

That’s from a note by Curtis Trimble, analyst at Global Hunter Securities. Joseph Allman at JPMorgan also weighed in, reiterating his Overweight rating on the stock.

But Cabot, which has risen an average of 30% a year for the past five years, isn’t cheap — at today’s price it’s trading at 41.5 times 2013 earnings.

After spending itself into a liquidity crisis last year, the Oklahoma City-based company reported Thursday that fourth-quarter revenue increased 30% to $3.5 billion, though profit declined 36% to $300 million as low natural-gas prices continue to weigh on the country’s second-biggest producer after Exxon Mobil.

Chesapeake’s stock is up 1.3% this afternoon, as the company heads into a future without disgraced CEO Aubrey McClendon, who’s stepping down on April 1 after a series of negative articles revealed questionable financial arrangements between him and the company.

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